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This article is a mess. From the third paragraph: > What happens when prices actually start to fall? Because that’s not just a hypothetical. It’s already hap

This article is a mess. From the third paragraph: > What happens when prices actually start to fall? Because that’s not just a hypothetical. It’s already happening in places like Phoenix, Atlanta, Miami, Dallas... Then two paragraphs later > In The Atlantic, Rogé Karma recently pointed out that housing prices are rising fastest in the very cities once seen as escapes from high-cost coasts, places like Phoenix and Dallas... So which is it? There is truth to the fact that the way the housing market is intertwined with the financial markets creates some risk, but those risks are manageable - a nationwide downturn in housing prices is exactly the kind of scenario addressed by the Fed's stress tests for banks. The article is full of bizarre logic. An increase in housing supply leads to a fall in prices, which leads to a fall in supply? No, in fact the conclusion contradicts the premise. The author is making the classic econ 101 mistake of confusing the supply curve (which is supply as a function of price) and quantity supplied. And finally the author explains his own solution which is... an increase in supply! But only the kind of supply he approves of ("small scale, incremental development"). Left unexplained is why this type of supply, if carried out on sufficient scale, wouldn't have the negative financial effects he worries about.

gota 1y ago
Regarding the bit about Dallas being an example of rise & fall of prices it seems to be an issue of poorly worded (or explained) difference in time frame. I replied under another post with the details from the sources (https://news.ycombinator.com/item?id=44635228 https://news.ycombinator.com/item?id=44635228)
falcor84 1y ago
> The author is making the classic econ 101 mistake of confusing the supply curve (which is supply as a function of price) and quantity supplied. This seems to be just another good demonstration of Michał Kalecki's famous aphorism about how "Economics is the science of confusing Stocks with Flows".
bilbo0s 1y ago
I like the part where the author advocates that cities step in and juice the construction of housing when the author says: 3. Financ[ing] entry-level housing locally by using the city’s position to unlock favorable financing without incurring unprotected financial risk. while performing the patented Obi Wan Jedi Hand Wave I would think.
bluGill 1y ago
Also no discussion of interest rates - I bought my house just a few years ago at just under 3%, today I would be paying more than 6% - I couldn't afford the payments if I refinanced. I believe that interest rates are the primary driver of less construction: people who want to buy can't afford to unless they downsize.
- kjkjadksj 1y ago
  3% change really breaks your budget? Higher rates generally mean lower home prices anyhow making the effective mortgage rate more similar than anticipated.
  - gedy 1y ago
    > Higher rates generally mean lower home prices It hasn't so far, though yes it should and eventually will imho. People I know tend to get ass in deep with debt will little room for error, and doubling interest on a mortgage would certainly push many over the edge of "affordability"
  - bluGill 1y ago
    Percentages don't work like this. It isn't a 3% change in rate, it is a doubling of the rate, and that will break the budget. You can find mortgage calculators to run whatever numbers you want, but it is hard to find any realistic scenario where it is less than $500/month, and for many over $1000/month. That amount of money will break any budget. I expect home prices to go down long term if interest rates remain as they are. However home prices are a lagging indicator and so it will take years for the interest rate changes to cause that change. (and over those years other things will happen meaning we will never be able to figure out how much change is because of rates and how much because of other factors)
    - ted_dunning 1y ago
      Percentages don't work like that, either. Since buyers are mostly bound by available monthly budget, raising interest rates increases effective price, which lowers demand at a particular price point which drives total purchase price back down to get the monthly mortgage price closer to affordable. Obviously, this feedback isn't entirely effective because buyers can simply opt out or delay a purchase but it does have substantial effect. Thus, increasing interest does not have the full impact as predicted by assuming that purchase price is fixed.
andrewmutz 1y ago
It is indeed a mess. It's full of strawmen, like: > Price Drops Don’t Lead to Supply. They Kill It. No one believes price drops cause an increase in supply. They believe an increase in supply causes price drops. > If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals. People believe that increasing supply will lower prices, not "stabilize the system". The current system is plenty stable, and thats the problem.
- ch4s3 1y ago
  Right clearly, as supply meets demand and prices stabilize or start to drop, new supply will slow down. You can easily have scenarios where lots of supply is being built at once and outruns demand by a lot and causes a short term drop in prices, but that still won't cause supply to drop. I think arguments like the one in the article have over-learned the lesson of 2008. Yes the financial crash in 2008 wiped out so many home builders that capacity to create supply was lowered. But that's not the sort of event that is caused by high supply.
  - creer 1y ago
    This discussion so far ignores cost. That's a problem. And cost has to do with intensity of effort. In the case of construction, if there is less construction going on, then there is ("all other things being equal") more personnel available: so less delays and less hourly cost. If there is less construction going on, there is also less pressure on materials suppliers, so less expensive lumber, concrete, etc. So that it's easier to make a profit. So that it might make sense to build lower value housing. While when construction is booming, there is extra less incentive to build lower value housing. Of course, if land availability is artificially constrained, then there is never much reason to build lower value housing. The profit is elsewhere.
- specialist 1y ago
  This is an uncharitable reading of the article. Investors & developers are motivated by profit, lower prices reduces (expectation of future) profit, so less housing will be built. Right? Yes, article is too wordy and lacks focus. Typical for us progressives. OC prescribes "bottom-up" something something. I haven't read Housing Trap, so can't comment. My prescription would be for policy makers to work with investors & developers, figure out how to make profits more stable and predictable, figure out how to institute those reforms. I'd also consider restructuring the housing industry. eg IIRC in Germany, developers are often also landowners. So they have longer horizons for considering profitability. Seems like an obvious reform, especially considering climate crisis. Like design & build wrt total lifetime cost of ownership, so adopting passivhaus and activhaus innovations is a no brainer. (Just trying to say when landowner is also developer, they can capture more profit by incorporating better tech.)
B56b 1y ago
The increase in supply he advocates for is a viable solution because it is sensitive to different things. Small, local development gets built and becomes profitable based on demand of the local housing market, but almost all housing today is built by large developers. These large developers are responding to the demand not for housing, but for the mortgage itself. Thanks to nationalized mortgage securitization the buyers the market cares about are those buying these securities: banks, pension funds, insurance companies, etc. When prices fall these securities become less attractive financial products, which decreases the demand for large development. Chuck advocates for local building, which can ignore this macro-level demand and instead respond to the actual local demand for shelter.
have-a-break 1y ago
A huge portion of why home prices dont fall is because most people dont pay for their homes up front, the actual cost of the home after the interest is 2x the total loan amount. So people dont want to sell for what they feel like is a loss. I'd argue building more supply just makes the problem worse, since the builders almost always try to extract as much money from the potential buyers. With the internet and everyone reporting salaries most sellers price houses to extract as much money as possible included possibly expected "crypto" or other hidden sources of income. The reality being we likely won't see a dip in home prices until the population holding homes ages out, saying there's a "housing crisis" is just spreading fear uncertainty and doubt to trick buys into unsatisfactory houses.
- StableAlkyne 1y ago
  > the actual cost of the home after the interest is 2x the total loan amount. So people dont want to sell for what they feel like is a loss. You're not taking a loss though; any payment above that month's interest goes to principle. If you sell, usually you take that money and kill the rest of the principle and and end the mortgage. YMMV outside the US, of course.
tacticalturtle 1y ago
As soon as I saw it was the founder of Strong Towns it all made sense. Strong Towns, Not Just Bikes, and all those content creators are fulfilling the “hobby” of city planning (ie, watching hours of city planning YouTube videos, but never actually organizing at a local level) This is a really great video about one man’s experience with trying to improve his community, getting involved in local government, and his criticism that the city planning YouTubers always gloss over what this actually looks like - they just point out what we’re doing wrong. https://youtu.be/bUs0ecnbOdo?si=8dVweyWfvIF5ddg- https://youtu.be/bUs0ecnbOdo?si=8dVweyWfvIF5ddg- So I think that’s why the logic doesn’t make sense. It’s not meant to be actionable. It’s meant to be easily digestible so that people participating in the hobby can feel enlightened.
- OldfieldFund 1y ago
  HackerNews folks are getting hooked on ragebait recently
  - reb 1y ago
    I dunno about that, the HN community has had a curmudgeonly streak as long as I've been a part of it (~15 years). Not exclusively, but... persistently!
- alexb_ 1y ago
  What? Strong Towns is not just their "content creation", they ARE local organizations. You might have a chapter in your city. This criticism tells me that you don't know what Strong Towns is, what they do, the actual specific policy guidelines they come up with and push that have real influence on local city planning. Strong Towns gives actionable proposals all the time, and their main purpose is local organizations to actually do local change. To accuse them of being a content creation scheme that does no organizing tells me that you have not looked into this at all and are making immediate assumptions based on the aesthetics of their content.
  - davidw 1y ago
    On balance, I think Strong Towns has done a lot of good, but in terms of organizing on the ground, I think the two large YIMBY organizations are better at equipping people to make change in their communities: * https://yimbyaction.org/ https://yimbyaction.org/ * https://welcomingneighbors.us/ https://welcomingneighbors.us/ I happily read and share a lot of Strong Towns content - they do put out a lot of good stuff despite the occasional dud. But in terms of learning how to show up and get things done, I think that's not their strongest spot.
scotty79 1y ago
> An increase in housing supply leads to a fall in prices, which leads to a fall in supply? No, in fact the conclusion contradicts the premise. That's econ 101. Or even common sense 101. If something is a worse deal because prices just dropped then people are less likely to start making it. Hence the supply stops rising and even drops because some people overshot in their business plans and now they stop making it because they just found out it's bo longer as profitable as they expected. Aren't you the one that just sees the one side of how supply curve works and forgot to check back with how the real world works?
zozbot234 1y ago
Even the title is a bit of a mess. What happens when the price of $THINGY goes down (where $THINGY is housing)? It depends. Did the price drop because of an increase in supply, a decline in demand, or both? That's what determines the overall effect (including something as basic as the change in quantity!), you can't just reason about a price change in isolation. If this article comes from the Strong Towns folks it's not making a very good argument for their POV, I'd expect way better.
bwanab 1y ago
> So which is it? It can easily be both statements are true. And a quick look at Zillow's data on Phoenix shows a huge run up in prices from 2015, but a leveling and interesting looking drop happening over the past year. The article certainly could have described this with a bit more elegance than it did. The logic of the article is that people want more housing up to the point in which existing owners become terrified at the prospect of losing their equity and demand action. The logic is bizarre because the behavior its trying to describe is bizarre. Economy's are extremely complicated feedback loops and housing is part of the economy.
mcv 1y ago
Oh, come on, man. Read the sources he points to before you invent imaginary contradictions. > The Phoenix housing market exploded briefly during the pandemic, when demand skyrocketed amid a housing supply shortage. Remote workers relocating to the relatively cheaper city brought up home prices and values. Between February 2020 and February 2025, home prices were up 53 percent in Phoenix and 56 percent statewide in Arizona, according to Zillow. During the same five years, prices grew by 45 percent nationally. > But the city has been experiencing a price correction in recent years, as demand slowed significantly with return-to-office orders and buying properties in the city became unaffordable for many—especially locals. "There's a mass sell-off occurring, as pandemic investors and snowbirds sell out," Did you know that prices can vary over time? They can go up first, and down later. That's what the article is referring to. > An increase in housing supply leads to a fall in prices, which leads to a fall in supply? You mean basic free market reacting to a disruption and looking for a new balance? High prices make supply go up, high supply leads to more competition and lower prices. This is basic economics, man.
- itake 1y ago
  The author says, increasing the supply pushes prices down which results in higher financial risks. But then the author says we should also increase the supply… without addressing the underlying point that increasing supply creates financial instability
  - mcv 1y ago
    He addresses that in the article. In fact, it's the primary thing the article is about. Half the article is about the contradiction between housing as investment and housing as shelter.
seanmcdirmid 1y ago
The ones that fall fast are the ones that have just risen fast. But seriously, real estate busts used to be booms for artists, hipsters, entrepreneurs getting started with cheap real estate. The current mall bust is also turning out to be an opportunity of sorts. And Tokyo has long shown what creativity can do with surplus real estate and capacity. Not great for investors, sure, but it can be a net win for society.

gota 1y ago

Regarding the bit about Dallas being an example of rise & fall of prices it seems to be an issue of poorly worded (or explained) difference in time frame. I replied under another post with the details from the sources (https://news.ycombinator.com/item?id=44635228 https://news.ycombinator.com/item?id=44635228)

falcor84 1y ago

> The author is making the classic econ 101 mistake of confusing the supply curve (which is supply as a function of price) and quantity supplied. This seems to be just another good demonstration of Michał Kalecki's famous aphorism about how "Economics is the science of confusing Stocks with Flows".

bilbo0s 1y ago

I like the part where the author advocates that cities step in and juice the construction of housing when the author says: 3. Financ[ing] entry-level housing locally by using the city’s position to unlock favorable financing without incurring unprotected financial risk. while performing the patented Obi Wan Jedi Hand Wave I would think.

bluGill 1y ago

Also no discussion of interest rates - I bought my house just a few years ago at just under 3%, today I would be paying more than 6% - I couldn't afford the payments if I refinanced. I believe that interest rates are the primary driver of less construction: people who want to buy can't afford to unless they downsize.

kjkjadksj 1y ago
3% change really breaks your budget? Higher rates generally mean lower home prices anyhow making the effective mortgage rate more similar than anticipated.
- gedy 1y ago
  > Higher rates generally mean lower home prices It hasn't so far, though yes it should and eventually will imho. People I know tend to get ass in deep with debt will little room for error, and doubling interest on a mortgage would certainly push many over the edge of "affordability"
- bluGill 1y ago
  Percentages don't work like this. It isn't a 3% change in rate, it is a doubling of the rate, and that will break the budget. You can find mortgage calculators to run whatever numbers you want, but it is hard to find any realistic scenario where it is less than $500/month, and for many over $1000/month. That amount of money will break any budget. I expect home prices to go down long term if interest rates remain as they are. However home prices are a lagging indicator and so it will take years for the interest rate changes to cause that change. (and over those years other things will happen meaning we will never be able to figure out how much change is because of rates and how much because of other factors)
  - ted_dunning 1y ago
    Percentages don't work like that, either. Since buyers are mostly bound by available monthly budget, raising interest rates increases effective price, which lowers demand at a particular price point which drives total purchase price back down to get the monthly mortgage price closer to affordable. Obviously, this feedback isn't entirely effective because buyers can simply opt out or delay a purchase but it does have substantial effect. Thus, increasing interest does not have the full impact as predicted by assuming that purchase price is fixed.

andrewmutz 1y ago

It is indeed a mess. It's full of strawmen, like: > Price Drops Don’t Lead to Supply. They Kill It. No one believes price drops cause an increase in supply. They believe an increase in supply causes price drops. > If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals. People believe that increasing supply will lower prices, not "stabilize the system". The current system is plenty stable, and thats the problem.

ch4s3 1y ago
Right clearly, as supply meets demand and prices stabilize or start to drop, new supply will slow down. You can easily have scenarios where lots of supply is being built at once and outruns demand by a lot and causes a short term drop in prices, but that still won't cause supply to drop. I think arguments like the one in the article have over-learned the lesson of 2008. Yes the financial crash in 2008 wiped out so many home builders that capacity to create supply was lowered. But that's not the sort of event that is caused by high supply.
- creer 1y ago
  This discussion so far ignores cost. That's a problem. And cost has to do with intensity of effort. In the case of construction, if there is less construction going on, then there is ("all other things being equal") more personnel available: so less delays and less hourly cost. If there is less construction going on, there is also less pressure on materials suppliers, so less expensive lumber, concrete, etc. So that it's easier to make a profit. So that it might make sense to build lower value housing. While when construction is booming, there is extra less incentive to build lower value housing. Of course, if land availability is artificially constrained, then there is never much reason to build lower value housing. The profit is elsewhere.
specialist 1y ago
This is an uncharitable reading of the article. Investors & developers are motivated by profit, lower prices reduces (expectation of future) profit, so less housing will be built. Right? Yes, article is too wordy and lacks focus. Typical for us progressives. OC prescribes "bottom-up" something something. I haven't read Housing Trap, so can't comment. My prescription would be for policy makers to work with investors & developers, figure out how to make profits more stable and predictable, figure out how to institute those reforms. I'd also consider restructuring the housing industry. eg IIRC in Germany, developers are often also landowners. So they have longer horizons for considering profitability. Seems like an obvious reform, especially considering climate crisis. Like design & build wrt total lifetime cost of ownership, so adopting passivhaus and activhaus innovations is a no brainer. (Just trying to say when landowner is also developer, they can capture more profit by incorporating better tech.)

B56b 1y ago

The increase in supply he advocates for is a viable solution because it is sensitive to different things. Small, local development gets built and becomes profitable based on demand of the local housing market, but almost all housing today is built by large developers. These large developers are responding to the demand not for housing, but for the mortgage itself. Thanks to nationalized mortgage securitization the buyers the market cares about are those buying these securities: banks, pension funds, insurance companies, etc. When prices fall these securities become less attractive financial products, which decreases the demand for large development. Chuck advocates for local building, which can ignore this macro-level demand and instead respond to the actual local demand for shelter.

have-a-break 1y ago

A huge portion of why home prices dont fall is because most people dont pay for their homes up front, the actual cost of the home after the interest is 2x the total loan amount. So people dont want to sell for what they feel like is a loss. I'd argue building more supply just makes the problem worse, since the builders almost always try to extract as much money from the potential buyers. With the internet and everyone reporting salaries most sellers price houses to extract as much money as possible included possibly expected "crypto" or other hidden sources of income. The reality being we likely won't see a dip in home prices until the population holding homes ages out, saying there's a "housing crisis" is just spreading fear uncertainty and doubt to trick buys into unsatisfactory houses.

StableAlkyne 1y ago
> the actual cost of the home after the interest is 2x the total loan amount. So people dont want to sell for what they feel like is a loss. You're not taking a loss though; any payment above that month's interest goes to principle. If you sell, usually you take that money and kill the rest of the principle and and end the mortgage. YMMV outside the US, of course.

tacticalturtle 1y ago

As soon as I saw it was the founder of Strong Towns it all made sense. Strong Towns, Not Just Bikes, and all those content creators are fulfilling the “hobby” of city planning (ie, watching hours of city planning YouTube videos, but never actually organizing at a local level) This is a really great video about one man’s experience with trying to improve his community, getting involved in local government, and his criticism that the city planning YouTubers always gloss over what this actually looks like - they just point out what we’re doing wrong. https://youtu.be/bUs0ecnbOdo?si=8dVweyWfvIF5ddg- https://youtu.be/bUs0ecnbOdo?si=8dVweyWfvIF5ddg- So I think that’s why the logic doesn’t make sense. It’s not meant to be actionable. It’s meant to be easily digestible so that people participating in the hobby can feel enlightened.

OldfieldFund 1y ago
HackerNews folks are getting hooked on ragebait recently
- reb 1y ago
  I dunno about that, the HN community has had a curmudgeonly streak as long as I've been a part of it (~15 years). Not exclusively, but... persistently!
alexb_ 1y ago
What? Strong Towns is not just their "content creation", they ARE local organizations. You might have a chapter in your city. This criticism tells me that you don't know what Strong Towns is, what they do, the actual specific policy guidelines they come up with and push that have real influence on local city planning. Strong Towns gives actionable proposals all the time, and their main purpose is local organizations to actually do local change. To accuse them of being a content creation scheme that does no organizing tells me that you have not looked into this at all and are making immediate assumptions based on the aesthetics of their content.
- davidw 1y ago
  On balance, I think Strong Towns has done a lot of good, but in terms of organizing on the ground, I think the two large YIMBY organizations are better at equipping people to make change in their communities: * https://yimbyaction.org/ https://yimbyaction.org/ * https://welcomingneighbors.us/ https://welcomingneighbors.us/ I happily read and share a lot of Strong Towns content - they do put out a lot of good stuff despite the occasional dud. But in terms of learning how to show up and get things done, I think that's not their strongest spot.

scotty79 1y ago

> An increase in housing supply leads to a fall in prices, which leads to a fall in supply? No, in fact the conclusion contradicts the premise. That's econ 101. Or even common sense 101. If something is a worse deal because prices just dropped then people are less likely to start making it. Hence the supply stops rising and even drops because some people overshot in their business plans and now they stop making it because they just found out it's bo longer as profitable as they expected. Aren't you the one that just sees the one side of how supply curve works and forgot to check back with how the real world works?

zozbot234 1y ago

Even the title is a bit of a mess. What happens when the price of $THINGY goes down (where $THINGY is housing)? It depends. Did the price drop because of an increase in supply, a decline in demand, or both? That's what determines the overall effect (including something as basic as the change in quantity!), you can't just reason about a price change in isolation. If this article comes from the Strong Towns folks it's not making a very good argument for their POV, I'd expect way better.

bwanab 1y ago

> So which is it? It can easily be both statements are true. And a quick look at Zillow's data on Phoenix shows a huge run up in prices from 2015, but a leveling and interesting looking drop happening over the past year. The article certainly could have described this with a bit more elegance than it did. The logic of the article is that people want more housing up to the point in which existing owners become terrified at the prospect of losing their equity and demand action. The logic is bizarre because the behavior its trying to describe is bizarre. Economy's are extremely complicated feedback loops and housing is part of the economy.

mcv 1y ago

Oh, come on, man. Read the sources he points to before you invent imaginary contradictions. > The Phoenix housing market exploded briefly during the pandemic, when demand skyrocketed amid a housing supply shortage. Remote workers relocating to the relatively cheaper city brought up home prices and values. Between February 2020 and February 2025, home prices were up 53 percent in Phoenix and 56 percent statewide in Arizona, according to Zillow. During the same five years, prices grew by 45 percent nationally. > But the city has been experiencing a price correction in recent years, as demand slowed significantly with return-to-office orders and buying properties in the city became unaffordable for many—especially locals. "There's a mass sell-off occurring, as pandemic investors and snowbirds sell out," Did you know that prices can vary over time? They can go up first, and down later. That's what the article is referring to. > An increase in housing supply leads to a fall in prices, which leads to a fall in supply? You mean basic free market reacting to a disruption and looking for a new balance? High prices make supply go up, high supply leads to more competition and lower prices. This is basic economics, man.

itake 1y ago
The author says, increasing the supply pushes prices down which results in higher financial risks. But then the author says we should also increase the supply… without addressing the underlying point that increasing supply creates financial instability
- mcv 1y ago
  He addresses that in the article. In fact, it's the primary thing the article is about. Half the article is about the contradiction between housing as investment and housing as shelter.

seanmcdirmid 1y ago

The ones that fall fast are the ones that have just risen fast. But seriously, real estate busts used to be booms for artists, hipsters, entrepreneurs getting started with cheap real estate. The current mall bust is also turning out to be an opportunity of sorts. And Tokyo has long shown what creativity can do with surplus real estate and capacity. Not great for investors, sure, but it can be a net win for society.